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TMI Blog2019 (10) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... planation offered supported by way of affidavits etc. was sufficient, to discharge the burden of proof cast upon him. In case the evidence in the face of assessee's inability to produce the parties with whom the assessee had no further interaction and infact had no authority to command their presence was to be discarded or disbelieved. If their presence was so necessary, AO could have exercised his powers to summon them. It is seen that neither the evidence is discredited nor the affidavits available on record have been upset. In the circumstances, in the absence of any rebuttal on the evidences on record, the AO, it appears merely ignored these evidences and insisted on the presence of the parties. The said exercise in all fairness cannot be justified. It is not a case that the parties were not available at the addresses provided by the assessee. AO having failed to issue summons or rebut the evidences, in these peculiar facts and circumstances, cannot be said to be justified in making the addition. These infirmities in the order passed have been assailed by the assessee in appeal, however, the CIT(A) also not cared to address them and has confirmed the additions solely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of material available on record. In the circumstances, the adjournment request was passed over requiring the parties especially the ld. CIT-DR to address the record. 3. In the second round, the ld. CIT-DR was heard. He was specifically required to go through the detailed submissions extracted in the order and address his submissions justifying the order passed where the facts had not been upset. The ld. CIT-DR vehemently relying upon the order of the CIT(A) drew specific attention to the findings arrived at in pages 39-40 in para 6.3. Referring to these observations, it was his submission that the assessee despite having been afforded more than adequate opportunity by the CIT(A) failed to produce the commission agents and infact expressed its categoric helplessness in not being able to produce the said parties. In these circumstances, it was his submission that rejecting the adjournment application, the addition sustained by the CIT(A) may be sustained. 4. The submissions of the ld. CIT-DR have been considered. In view of the fact that facts are already available on record, the adjournment request moved on behalf of the assessee was rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce Shri Abhay Pal Jaswal and Ms. Shilpi Tandon. The AO disallowed the claim of expenses qua these two Agents as he was of the view that since despite opportunity, the assessee failed to produce them, the assessee had not satisfactorily explained the expense. The assessee carried the issue in appeal before the CIT(A). 5.4 It is seen that before the CIT(A) also, the assessee reiterated that these two persons since were no longer associated with the assessee, accordingly could not be produced. However, reliance was placed on the supporting evidences on the basis of these it has been argued that relying on similar disallowance the AO has accepted the claim for the five persons, thus similar set of documents, it is seen has been argued for these two parties could not be discarded. The assessee reiterated its reply dated 12.12.2011 made before the AO that since these persons have left the dealings with the assessee, hence these persons cannot be physically produced before learned A.O. for recording of their statements. It was further reiterated that the necessary details in regard to acknowledgement of their return of Income; their PAN number and TDS Certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of duly sworn in affidavit, photocopy of the confirmation letter received from M/s. Medilloyd, Cuttack are enclosed. 6. That in the case of Abhey Pal Jaswal, he was allocated the area of eastern Utter Pradesh wherein he dealt with thirteen parties. The assessee made the sales of ₹ 61,75,240/- to these parties through this agent, on which commission ranging from 4-5% was paid. The party-wise details of sales made and commission paid is enclosed. MJs. Matrix Pharmaceuticals, Gorakhpur, MJs. R.K. Enterprises, Gorakhpur, M/s. Swati Drug Agencies, Gorakhpur and MJs. Sharda Medical Agency, Partapgarh, had also issued confirmation letter regarding services rendered by this agent on behalf of the assessee, which were also filed during the course of assessment proceedings alongwith the reply dated 12.12.2011, filed against the show cause notice dated 05.12.2011. The turnover achieved through these four parties amounts to ₹ 47,14,058/- which constitutes 76.34% of the turnover achieved by this person. The copy of the Income Tax Return filed by him, copy of duly sworn in affidavit, photocopy of the confirmation letters received from these four parties are e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee duly proved the genuineness of the commission paid to these persons by filing during the course of assessment proceedings Income Tax Returns of these two persons in which they had shown commission as one of their source of income, TDS Certificates, duly sworn in affidavits given by these persons, names and addresses of the parties allocated areas in which these persons had rendered their services on behalf of the assessee, nature of work done was also given in their affidavits, party wise details of sales made by the assessee through these persons and even confirmation from the parties to whom these persons had rendered their services on behalf of the assessee. All the payments were made through account payee cheques. Both these persons were genuine and are not related to the assessee. Moreover, there was considerable increase in sales as well as profitability. None of these documents have been rebutted/disowned by the learned A.O. in his assessment order. Rather, same set of documents have been accepted by learned A.O. in case of five out of seven agents. c) That the learned A.O. has not given any specific findings regarding the non-genuineness of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said agents, however, no further opportunity to prove the genuineness of the transaction was given after that and the order was passed merely within two days after the last hearing. 2.3 It is submitted that the genuineness of the payments have never been doubted by the Ld. AO as the payments were made through account payee cheques after deduction of the applicable TDS to all the commission agents. Moreover, the said commission agents were not related or sister concerns of the assessee, thus, what is point of making any payment to a non-related persons when not for incurring any expenditure. The Ld. AO has passed the order merely on the basis of non-production of the commission agents and stating that the assessee did not produce any evidence with regard to the work done by these two persons . In this regard, it is submitted that the order has been passed so abruptly on non-production of the commission agents that the assessee was never allowed any opportunity to present the same as explained above. 2.4 Now, it is submitted that the total commission incurred for the year has been paid on the sales affected by the commission agents. The impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urden is on the assessee to prove the creditworthiness of the parties. Therefore, if at all the AO had any doubt, he was well within his powers to issue summons u/s 131 or call for information u/s 133(6) from the said agents which has not been done. Under these circumstances, it is imperative that the Ld.AO has only acted in a haste and made the addition for the sake of making the disallowance without making any enquiry and verification 5.10 As noted, the ld. CIT-DR has reiterated the fact that the assessee has failed to produce these two Commission Agents. Emphasis was laid on the following findings of facts available on record : . It has also been submitted that the assessee has provided complete particulars of the persons to whom commission has been paid and the Assessing Officer could have used his power under the Act to verify the genuineness of commission payments. When asked as to whether the assessee is ready to produce the persons now for verification, the learned AR of the assessee has shown his inability in this regard. It means, the assessee is not ready to produce the persons to whom the commission payments have been made inspite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record. If their presence was so necessary, AO could have exercised his powers to summon them. It is seen that neither the evidence is discredited nor the affidavits available on record have been upset. In the circumstances, in the absence of any rebuttal on the evidences on record, the AO, it appears merely ignored these evidences and insisted on the presence of the parties. The said exercise in all fairness cannot be justified. It is not a case that the parties were not available at the addresses provided by the assessee. The AO having failed to issue summons or rebut the evidences, in these peculiar facts and circumstances, cannot be said to be justified in making the addition. These infirmities in the order passed have been assailed by the assessee in appeal, however, the ld. CIT(A) also not cared to address them and has confirmed the additions solely on the ground that the parties were not produced ignoring the fact that the assessee had no authority to command their presence. The evidences relied upon in support of the claim and the submissions extracted in detail in the impugned order, it is seen have not been assailed or upset. Being satisfied with the explanation advance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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